0HOUSTON — Exxon Mobil announced on Tuesday that it would triple its oil and gas production in the nation’s hottest shale field by 2025 in the newest sign that the boom in national crude production is gaining momentum.
The company cited the recent reduction in the corporate tax rate as one reason for its increased interest in investing more in the Permian Basin, which straddles West Texas and New Mexico. It is also a logical sequel to its acquisition of 275,000 acres of Permian fields in New Mexico from the Bass family of Fort Worth last year for up to $6.6 billion in stock and cash.
The Permian Basin is leading the way in a national recovery of oil production after a three-year fall in crude prices. Roughly the size of South Dakota, the Permian has multiple layers of thick shale, easing the costs of exploration, drilling and production.
After a decade of development by smaller, independent producers, those geological advantages in the Permian shale have recently attracted enhanced interest and investment dollars from Exxon Mobil and other major producers such as Chevron and Royal Dutch Shell.
“We can deliver profitable production at a range of prices,” Sara Ortwein, president of XTO Energy, Exxon Mobil’s shale drilling subsidiary, said in a company statement, “and we have logistics and technology advantages over our competitors.”
Exxon Mobil, the nation’s largest oil company, said the tripling of oil and natural gas production would bring its output in the Permian Basin to 600,000 barrels a day. To support that increased production, it said, it will invest more than $2 billion to expand a recently acquired transport terminal and other production infrastructure. It noted in a statement that “recent changes in the U.S. corporate tax rate create an environment for increased future capital investments.”
It also said that “reduced drilling costs, technology improvements and expanded acreage” gave the company the opportunity to produce efficiently in the Permian.
Energy companies are quickly building pipelines to move Permian oil and gas to Gulf of Mexico ports for export as well as pipelines to Mexico, where natural gas from the United States is replacing oil and coal to remake the country’s electricity system and clean up urban air.
On Monday, Exxon Mobil said it would spend $50 billion on United States operations over the next five years. Much of that spending had been previously announced, but it highlighted the company’s continued shift in preference to operations in the United States and the Western Hemisphere, after decades of searching to replace reserves in far-flung regions that are frequently unstable.
With the price of West Texas intermediate crude oil rising to around $65 a barrel from below $40 in recent years, the Energy Department predicts that daily domestic oil production will increase to an average of 10.3 million barrels a day this year from an average of 9.3 million in 2017 — setting a production record and surpassing the output of Saudi Arabia. The department projects an additional 500,000 barrels of production in 2019.
But not all oil companies have prospered. Some of the smaller independent companies that pioneered the shale boom borrowed heavily and suffered when oil and gas prices swooned in recent years. There have been scores of bankruptcies.
Chesapeake Energy, based in Oklahoma City and once an active driller in the Permian, laid off roughly 400 employees on Tuesday, about 13 percent of its work force, after selling off about a quarter of its wells over the last three years.